Parents in 90's still unfortunately have a mortgage about $50k. Dad may need memory care in facility within 5 yrs. Cash assets around $200k. Wondering if it is OK for them to pay off their mortgage, or should they park $10k with each of 5 adult kids and ask the kids to save it in case mom survives dad by a lot of years?Does Medicaid allow spouses to pay off mortgage, within 5 yrs? Both names are on the mortgage.

20 Answers

Anchor mom, apparently Medicaid will delay paying your mom's bills for the time that could have been paid with 2 x $12, 000. So she will be in-eligible for however long that takes, if she needs Medicaid 5 years frim the time she gifted that money. If its longer than 5 yrs then you're OK. The scenario you describe is one reason my parents have decided not to do the gifting scheme. Much better to let the pafents use their monies to actually benefit themselves. Nobody knows when they mihht have a stroke, or fall, or whatever, that lands them in hospital and then rehab, and then in-home care. The $175, 000 bank account, is not very much these days. Nursing home highest level of care is approaching $10, 000 per month in some areas. A good thing to do is pre-pay her funeral, that is not something you want to have to pay after she dies. Even a simple burial can be $5, 000, that's a cardboard casket and no reviewal or obit. A metal casket, makeup/hair, flowers, music, memory cards, obit ...more like $10, 000. Direct cremation is much less but still costs something, who is going to pay that?

My mother in law gave each of her two sons 12K two years ago. My husband and I kept the money separate from our money while my husbands brother spent his. His brother has no bank accounts or money to speak of they are hand to mouth people. My question is if my mother in law needs to go on medicaid for nursing home reasons how will that play out? Will we be asked to pay back what she gave us and also what she gave her other son? She still has money in the back ... nearly 175K ... Would appreciate any insight just in case she's 85 so one never knows ...

I appreciate the specific ideas, Thank you. Sounds like paying off mortgage is best idea (especially since its 8.375%). Did find an actual Elder Law lawyer thru the lady who thought gifting was good (not going the gifting direction---can't even begin to imagine how someone could ask for that money back, what if 2 of 5 wouldn't comply?). Funerals already prepaid. Still amazes me that no attorney has put all the variables into a nice pre-packaged Elder Planning software for $69.95, since we can buy TurboTax and everyone knows how complex taxes are. Wouldnt think the types of Elder plans for most of us would be more complex than Taxes!

You probably do need to consult with an elder care attorney but you can also figure some things out on your own by reading 'real' info on line. 1 Prepay funerals - that is always allowed. There may be other allowed pre-payable spend downs but check this out. It varies by state. 2 Check into refinancing the house and taking more money out to update appliances, make needed repairs, etc as needed so that your Mom will not be facing any major upkeep problems in the future - the debt of repayment for the new mortgage needs to be within what you Mom will be able to pay if she is there alone. The home is a protected asset for her as long as she is able to live there regardless of what happens to your father, as are other monies spent on her at this time. So get her into as good of shape as possible before their assets need to be scrutinized by a Medicaid process. 3) And if there are any non-tracked assets that you parents want to pass along as gifts now is the time to do it - at every birthday, anniversary and Christmas. Cash is tracked - jewelry, family antiques, china etc are usually not tracked unless they are specifically insured. .. Info doesn't replace talking to an attorney but its a few of the things we learned the hard way... Hugs

Samara - also please make sure that your folks are paying for everything. It may be easier when you're at Target to pick up & pay for those towels for mom, but DON'T! If mom repays you, it looks like "gifting" if in the future either her or your dad needs to apply for Medicaid.

Really once they hit their 90's, it's my perspective, that you have to keep in the back of your mind that they will - if they live long enough - run out of funds and will need to apply for Medicaid either for community based services in their home or for skilled nursing in a NH. 200K although is a nice nest egg, is maybe 2 years of NH costs. The costs are just staggering.

With cash assets at $200K, and both in their 90s, pay off the mortgage, and leave the rest for when or if they may need nursing facilities. Do you really think each sibling would "save" $10K each? Your parents need a irrevocable trust where they designate what they want done with their assets. If they still have no memory problems, then THEY should make their decision what they want to do with their money, not you.

samara, are your parents using an *Elder Law* attorney? It's a whole different ballgame. Yesterday my sig other and I went to sign our own Wills, Trusts, and POA's. It is so very complex. My sig other has his master's in economics/accounting and he was baffled by a couple of things which the attorney was able to clear up for him, and here he's been reading various books on Trusts, etc.

My parents' previous attorney was their real estate attorney who they asked to create a Will. My parents wanted to go back to that attorney to update their Will... whew, that attorney had retired some time ago. Their current Will, written over a decade ago, is minefield. I just hope my parents live long enough to get that Will redone. And they will be using an Elder Law attorney this time around.

Samara - " No Gifting After Ninety" should be an aging care bumpersticker.

I'm going to approach this a bit differently. I'm going to assume dad goes into NH June 2015 & I am going to work back from that date for my parents finances. This time of the year (dec - jan) is ideal for doing this as your parents are getting EOY details as to interest paid in CC; their SS & retirement awards letters get sent; any 1099's paid. You can put together a good & realistic snapshot of where they stand financially. I use the term snapshot deliberately as Medicaid will do just this, they do a snapshot of your parents finances based on the day of the application. And their $ is fixed based on the "snapshot" date.

You want to do now things to change whatever is best for dad's theoretical June Nh admission & snapshot. If your state allows for the community spouse to retain 114K in non exempt assets, then I'd start spending down to get to that point. (the 114k is what most states allow , but you have to find out what is the exact $ amount for your state) Personally paying off the mortgage would be something I would do (also it better positions mom to be able to get a HELOC or other loan if she needs $ 2 years from now). I'd call the mortgage holder to see what the pay off is AND be sure to find out if there is a penalty for early release of deed of trust. Then I'd get mom a newer & more reliable car (& trade in their cars to do this, so only 1 car). Then use whatever is left to spend down on dads care but try not to spend down under the 114k asset limit ( its really important to find out what this $ amount is as it is your parents benchmark). What all this does is to impoverish 1 of your parents (your dad) so that he will be Ok for Medicaid but leave mom with the max liquid $ allowed; a good car; & a house owned free & clear. Then when dad gies into NH, mom then gets the maximum CSRA or MMNA under your states rules. Community Spouse Resources allowance & Minimum Monthly Needs Allowance, it's kinda like alimony for the nonNH spouse.

Good luck in all this. I understand your adversion to seeing an attorney, but there are some things that you simply must have some sort of legal done in order for the document to be valid.

Another option would be to contact your local state social services office and ask to speak to someone about Medicaid. If your father needs facility care, funds would need to be spent down before he qualifies for Medicaid, but the "community spouse", your mom, is allowed to keep a certain amount of money. This can vary by state, but seems to be in the neighborhood of $100,000 for most states. Dad's social security would probably go to the facility to partially pay for his care, but this can also vary by state with some states allowing more to stay with the community spouse. If dad passes first, mom would then get his social security amount if it is higher than hers. Knowing the rules in your state might help you to make decisions about the mortgage.

They only pay PI, their TI they pay themselves (and get about 50% taxes refund thru our states property tax refund for people lower incomes). Like so many other seniors, their nest egg was not designed to last into their 90's, nor do they have time to wait for the markets to be making a profit. Trying to plan for worst case scenario which would be Dad running thru the whole nest egg with nursint home bills, leaving mom with the house and reduced Soc Security check. Not too worried about roof or appliances as we kids can help there--they only use need fridge and microwave. Furnace & AC just replaced and warrantied. Lawyer--they have one, who basically charge them about a grand to type my name into generic POA/will/trust forms....grrr...there was very little in the way of advice for future plans. Have gone to several free retirement planning "seminars" which are all designed to sign you up with their law firm. I have already been to a lawyer with parents, it didn't include anything like how to make good choices re: preserving funds for one spouse if the other needs mega level of care. This type of information should be easily obtainable by anyone with a college degree and not require expensive lawyers who charge $400 an hour. Why does everything need a lawyer (except maybe because Washington is full of em).

samara, are you saying that your Mom wouldn't be able to afford to pay the mortgage if something happens to your Dad and that is why you rather see the mortgage paid off?

If that is the case, would your Mom be able to pay the real estate taxes, the house insurance, the utilities? Once a mortgage is paid in full, the taxes and insurance now have to be paid by the homeowner, where in the past it usually is part of the mortgage payment.

How about maintaining the house, what if there is a major expense such a needing plumbing repairs, a new roof, even a new dishwasher. I had a house where all the appliances in the kitchen needed replacing within the same month because the age of the appliances finally caught up. Right now I need major plumbing repair due to a leak in the upstairs' bathroom, and that isn't cheap.

Often, the initial consult for an elder care attorney is free, find one through the search bar at the top. In any event, money well spent. Pam is correct about getting into nh on private pay initially. Go for some visits BEFORE the emergency happens. And get poa and health care proxy in place.

Yes I should seek a lawyer with estate planning expertise. Dad has mild dementia, manageable at home between me & mom and a couple paid caregivers. Eventually may need memory care in facility, and $200k won't last long. But mom wants to continue living in their current home, but (yes another but!) when Dad does die, she won't get as large a Social Sec check anymore, so the mortgage payment would be a problem. I thought she should pay it off now to protect her. Someone else at church (not a lawyer) said to park some money with each kid, and if she needs it later then they'll give it back, argh but nobody knows when or if Medicaid will be needed. They do have small LTC policy they share. Yes this kind of complicated, thought maybe someone here had already worked through and could offer guidance. I dislike lawyer bills--you don't know in advance how much it will cost, and it never seems to end, if you have questions or developments in the future I hate feeling incapable of making a choice without talking to the lawyer again...and again. Taking care of ones parents shouldn't cost so much in expert's fees.

NO gifts! Leave the stupid mortgage alone. Better to have Dad in a nursing home on private pay at first, more doors open to better places. Trust me on this, if you enter as Medicaid, choices are horribly limited. Visit some facilities now so you get a better understanding of how it works.

No gifting of money or property. Jeanne is right see an elder law attorney well versed in Medicaid planning. Though with 200k in the bank, 50k still owed on the house, what is the approximate value of the home? How much longer on the mortgage?

Estimating 5 years to Dad needing a facility when he is already in his 90's is very optimistic. Anything could happen any day that would require nursing home care at any time.

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